1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Dr. Paul Price
Dr. Paul Price
Articles (513)  | Author's Website |

What Have You Done for Me Lately? Precious (Metals) Little

March 31, 2013 | About:

Quantitive Easing (QE) programs are sure to debase fiat-based currencies over the long term. Advocates for ownership of gold are quick to let everyone know that paper money has no ‘real’ value while precious metals cannot be printed up by central banks.

Hard money cheerleaders have been sorely disappointed over the past couple of years. Despite extensive worldwide money printing the price of gold has declined over the past 3, 6 and 12-months. The GLD ETF showed a modest cumulative return of + 11.39% over the past two years. In the trailing year, the price of gold declined by 3.81%.


Gold bugs can take solace in noting that the past half-decade maintained a 71.41% rise overall.


Owners of equities have done better over the past two years while lagging when measured from five years earlier, back on March 30, 2008. The past 24-months saw a 22.35% total return on the SPY ETF. That almost exactly doubled the return of gold over the same period.


In a perfect world we would all have owned gold until its peak above $1900 per oz. in August 2011 and then switched 100% into stocks. I doubt many of us were prescient enough to do have done that.

The mixed bag of results, with gold outperforming over five years while underperforming lately, speaks to the wisdom of diversification. Each asset class has its own pros and cons. Recent events in Cyprus, of all places, proved that nobody can truly predict how future financial matters will unfold. The fluid nature of capital controls, taxation and legislation makes preparing for a variety of potential outcomes more critical than ever.

I don’t own gold personally but it’s hard to quibble with anyone who desires to have at least some portion of their overall net worth in something tangible. If you do opt to own precious metals make sure you deal through a reputable firm and be sure to take physical delivery. Paper gold (e.g., GLD shares or custodial certificates of ownership) may not provide the protection you seek in case of a true geopolitical firestorm.

About the author:

Dr. Paul Price


Visit Dr. Paul Price's Website

Rating: 3.4/5 (12 votes)


Please leave your comment:

More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by Dr. Paul Price

User Generated Screeners

canidPE >50th percentile of INDUSTR
brucexoct 17 user defined screen
AngryQuality Growth cheap
EnjoylifeDad 1
punjanoot2007a academy+joe
kltan12LOW PB/PS
carlentValue - Short
carlentValue - Long
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat